Only recently have they become more aware that the economic well-being of Canada depends crucially on its capacity to make the most effective use of people and to maintain the skills of its workforce.

Traditionally, business and government focused on finding ways to boost economic growth by increasing consumer spending, creating a climate that encourages business investment, and improving Canada's export position. While human resources have always been considered important to economic performance, they usually took a back seat to these demand issues.

Today, both business and government are shifting their emphasis. One reason for this shift is what has been termed by economists as "the productivity paradox." Despite record investment in machinery and equipment, particularly high-tech, the productivity record has been disappointing and Canada's economic performance remains below potential. Unemployment is high, the outlook for youth is discouraging, and the country's relative position in the global economy has fallen.¹ After a decade of study, evidence is beginning to emerge that places part of the responsibility on the shoulders of inadequate employee skills and training. No matter how much capital investment occurs, without adequate training and education employers and their employees will remain unable to harvest the full potential of that investment. In other words, more highly skilled, literate people are key to increasing productivity.

This study explores the economic benefits of improving literacy skills in the workplace, from the perspective of both employers and employees. The Conference Board identified and measured these benefits by conducting a survey of employers as well as by analysing the data gathered on individuals in the 1994 International Adult Literacy Survey (IALS).

Employers Benefit from Enhanced Literacy Skills
Companies offer literacy skills training to their employees because enhanced reading, writing and numeracy skills will ultimately contribute to a stronger bottom line through time savings, lower costs, and improvements in the quality of work. The Conference Board, in a recent survey of 41 companies that offer literacy skills training to their employees, found that these direct benefits are just the tip of the iceberg as to how companies benefit from enhancing the literacy skills of their workforce. Other benefits include unleashing the potential of individual employees, cementing stronger labour-management relations, and moving the entire organization towards corporate goals set to ensure success in a highly competitive, often changing marketplace. All of these benefits from literacy skills training contribute to the company's bottom-line performance.

Tracking the effects of employee training on an organization's operations is very difficult and, as many respondents noted, prohibitively expensive. For these reasons, few companies collect quantitative data on the benefits arising from the full range of training that they deliver to their employees, including literacy skills training. This means that it is not currently possible to derive an aggregated number that conveys the dollar value to Canadian employers of improving their employees' literacy skills. Nevertheless, 21 companies that took part in the survey provided qualitative feedback on the benefits of literacy training, and discussed the impact on their organizations.

1 The Conference Board of Canada, Performance and Potential: Assessing Canada's Social and Economic Performance (Ottawa: The Conference Board of Canada, 1996), p. 3.

Acknowledgment

This study made possible through funding by the National Literacy Secretariat, Human Resources Development Canada.